The Central Banks Are Printing Money, Time To Buy Gold

The Central Banks Are Printing Money, Time To Buy Gold

Gold is one of the best long term investments available today even as the USD’s value improves compared with other currencies.

“The hierarchy of global currencies remains Gold-USD/EUR/JPY,” he said in this month’s edition of his Credit Strategist newsletter. “Gold has yet to make its move but investors should use gold’s recalcitrance as an opportunity to buy and save themselves.”

Gold more than 2X’s from Y’s 2008 to 2011 as the global economy suffered the worst recession in 80 yrs and central banks responded by flooding markets with dollars, Euros and Yen. The precious Yellow metal retraced about 38% from its Y 2011 peak of 1,923 oz as business activity recovered and investors put money into higher-yielding assets.

The analysts noted that Gold’s value will rise as central banks worldwide devalue their currencies to aid growth.

The European Central Bank (ECB) and Bank of Japan (BOJ) are buying bonds to drive down interest rates, while almost 24 countries including Russia, China, Canada and India have cut borrowing costs this year.

“Paper currencies are being debauched by virtually everything that central banks do,” he said. The Federal Reserve’s 1st rake hike in 9 years, which may come as early as September, won’t change the worldwide devaluation of currencies, he said.

Europe wants a weak Euro

After weakening to 13-yr lows in February, the Euro recovered somewhat in May as the European Union’s economy showed signs of life. The currency lost value as Greece negotiated with its creditors before defaulting on a debt payment to the International Monetary Fund (IMF) on 30 June.

He said he expects the EUR to remain weak as long as the European Central Bank is intent on supporting the region’s recovery.

“A weaker Euro is not only essential to the ECB’s plan to stimulate the European economy but is the primary tool available to it with European interest rates at such low levels,” he said.

Gold’s subdued reaction to the Greece’s financial turmoil can be attributed to the nature of the crisis.

There is no reason for Gold to get any love now because this is a political crisis, not a currency crisis. Gold is only useful in a complete currency collapse, as long as there is a viable alternative that is integrated with a banking system then Gold will remain unloved.

Have a terrific weekend.

HeffX-LTN

Paul Ebeling

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